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Editor: Paul L. Caron
Pepperdine University School of Law

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Sunday, August 24, 2014

The IRS Scandal, Day 472

IRS Logo 2The American Thinker: IRS E-mails: The Perfect Storm:

August 22 is another deadline for the Obama administration’s IRS officials to come clean about their clear malfeasance in office. Judge Emmet Sullivan, who has acted sua sponte to compel IRS officials to provide all the details surrounding the “lost” e-mails, has the reputation of a judicial pit bull, a federal judge who insists that his orders and his office be treated with proper respect.

This is a scandal ordinary Americans can completely grasp in all its incarnations. The Obama administration picks out its political opponents for particular persecution. The organ of federal power chosen for this persecution, the IRS, is despised and feared by millions of Americans. Did Obama’s flacks forget that the last major congressional action to rein in the IRS, the IRS Restructuring and Reform Act of 1998, passed the Senate by a vote of 97 to 0 and the House by a vote of 402 to 8, and was signed into law by Bill Clinton? ...

The explosion of information technology expertise among ordinary Americans means that even the relatively apolitical snicker at the hapless efforts of the IRS bosses to pretend that all the e-mail records have been lost. Most Americans use e-mails all the time and know just how difficult it would be to utterly scrub forever even casual e-mails sent to friends and acquaintances. Most Americans in their ordinary lives assume that an e-mail they send will exist in myriad places, and that if their computers crash, this will not affect these independent records of e-mails sent.

The scandal then is the perfect storm of political corruption. Obama’s IRS partisans do something very bad. They complement this misbehavior with condescending e-mails that seem to relish their abuse of political opponents. When confronted by the proper regulating agency within our constitutional system, Congress, they smirk, dissemble, rebel, and ignore. These bad folks then assume that ordinary Americans know much less about information technology than they do and think that they can lie with impunity. When the third branch of government, the Judicial Branch, is brought into the argument, these IRS clowns lie and hide again. ...

What all this means is that when these records appear – and with a federal judge threatening IRS employees with jail time, these records will appear – then the whole sordid mess will implode like a deck of cards. The depth of corruption, like the depth of corruption in the VA scandal, will be impossible to fob off as rogue employees acting badly. Heads will have to roll, and this grim knowledge will move those who know the truth – very likely people we have not heard of yet – to come out of the shadows and to spill their guts to save themselves. It is the perfect storm, and it is coming up fast.

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August 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, August 23, 2014

IRS Releases 2012 Individual Income Tax Return Data

IRSThe IRS yesterday released  (IR-2014-83) Publication 1304, Individual Income Tax Returns 2012:

U.S. taxpayers filed 144.9 million individual income tax returns for tax year 2012, down 0.3 percent from 2011. The adjusted gross income less deficit reported on these returns totaled $9.1 trillion, which is an 8.7-percent increase from the prior year.

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August 23, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 471

IRS Logo 2Washington Examiner op-ed:  The Case for Impeaching Lois Lerner and Other Lawbreakers at the IRS, by Ken Cuccinelli & Mark Fitzgibbons:

In April, the House Ways and Means Committee referred Lois Lerner to the Department of Justice for criminal prosecution. Nothing has come of it. Given the politicization and lawlessness of the DOJ under Attorney General Eric Holder, nothing likely will.

The House should move to impeach Lerner instead, and other IRS officials who have broken the law. Federal bureaucrats need to be sent a message that lawbreaking is not part of their job descriptions, and that notwithstanding our recalcitrant Justice Department, our constitutional system provides this remedy against executive branch officials gone rogue under the law.

More importantly, Americans deserve to know that lawbreaking within their own government will have consequences. ... If criminal conduct within the IRS and the federal bureaucracy won’t be prosecuted, our Constitution at least gives our elected representatives a check of impeachment on unelected “civil officers.”

Impeaching Lerner and others may actually help restore some faith that someone in government takes the rule of law seriously.

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August 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Friday, August 22, 2014

The IRS Scandal, Day 470

Thursday, August 21, 2014

ObamaCare Tax Forms Pose Challenge for Enrollees, Exchanges

Washington Times, Obamacare Tax Forms May Pose Challenge for Enrollees, Exchanges:

Obamacare customers won’t be able to file their tax returns next year until the government sends them a form detailing their coverage and tax credits, and if those forms are late some taxpayers could face a delay in seeking their refunds.

1095A

Federal and state officials said they’re working on the forms, known as the 1095A, and vowed to meet the Jan. 31 deadline for issuing them. But some tax professionals are skeptical, citing the administration’s iffy track record on being able to meet other deadlines in the massive health overhaul law. “It really strains credulity to think 1095A is not going to be a big problem,” said George Brandes, vice president for health programs at Jackson Hewitt Tax Service.

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August 21, 2014 in IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 469

IRS Logo 2Breitbart:  Federal Judge Takes Extraordinaru Steps in IRS Lawsuit:

The order from U.S. District Court Judge Emmett Sullivan was certainly clear enough. In a landmark victory for Judicial Watch, the federal judge ordered the IRS to submit sworn declarations detailing what happened to Lois Lerner’s “lost” emails and what steps were being taken to find them. What was provided was a garbled explanation from no less than five IRS officials with more holes than a block of Swiss cheese. ...

These sworn declarations came from five IRS officials: Aaron G. Signor, John H. Minsek, Stephen L. Manning, Timothy P. Camus, and Thomas J. Kane.

We noted that the IRS and DOJ filings seem to treat as a joke Judge Sullivan’s order requiring the IRS to produce details about Lois Lerner’s “lost” emails and any efforts to retrieve and produce them to Judicial Watch as required under law.

This is the story we’re supposed to believe, according to these IRS officials: Lerner’s crashed drive was analyzed by two technicians who employed a variety of tech tactics to recover the data, to no avail. The drives – which, mind you, had no recoverable data according to these experts – were then “degaussed” (wiped clean) “to protect against any possible disclosure of… taxpayer information.” Anyone with even a passing familiarity with the IRS email scandal would have realized that these filings were a blatant continuation of the cover-up.

Well, if there’s one thing I know, it is that most federal courts don’t take kindly to being treated disrespectfully and expected to act like a somnolent member of Congress as administration officials mislead, omit, and play games.

Sure enough, in a stunning move, Judge Sullivan took the extraordinary step of launching an independent inquiry into the issue of Lerner’s missing emails. ...

Judicial Watch has filed hundreds of FOIA lawsuits. I have never seen this type of court action in all my 16 years at Judicial Watch.

Judge Sullivan has already authorized Judicial Watch to submit a request for limited discovery into the missing IRS records after September 10. So stay tuned for further details very soon.

Judge Sullivan took the additional step of appointing Magistrate Judge John M. Facciola to manage and assist in discussions between Judicial Watch and the IRS about how to obtain the missing records. Magistrate Facciola is an expert in e-discovery.

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August 21, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Wednesday, August 20, 2014

The IRS Scandal, Day 468

IRS Logo 2Wonkette:  Laura Ingraham Explains That Thugs Gonna Thug:

What do you think would have happened, guys, if tea party activists, right, came to Washington D.C. after the IRS scandal broke and decided to start smashing windows, rampaging through neighborhoods, throwing fire bombs. What do you think Eric Holder and Barack Obama would do? Would they start saying, ‘Well, we understand that people are angry, we really get your emotion here, but this isn’t acceptable. Do you really think there would have been this nuanced language, this emoting that has become the pastime of this administration?

Washington Times:  Intolerance on the Left: The Marketplace of Ideas Can’t Function Without Civility:

We often hear those on the right branded as “intolerant.” We’re all a bunch of extremists who just want to shut down the other side, right? We’re unlike those on the left, who welcome debate and want to give all viewpoints a respectful hearing.

Or so we’re told. We might even start to believe it — until we encounter the oh-so-tolerant voices of our loyal opposition. Voices such as: ...

Lois Lerner: According to emails written by the former Internal Revenue Service official, conservatives are “crazies” and another word too obscene to quote. Conservatives who dare to criticize the government, in her view, want to “take us down.” Small wonder that the agency targeted conservative groups during Ms. Lerner’s tenure.

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August 20, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, August 19, 2014

TIGTA: ObamaCare Medical Device Tax Is Raising 25% Less Revenue Than Expected, IRS Administration of Tax Is Rife With Errors

TIGTA The Treasury Inspector General for Tax Administration today released The Affordable Care Act: An Improved Strategy Is Needed to Ensure Accurate Reporting and Payment of the Medical Device Excise Tax (2014-43-043):

The Affordable Care Act includes a tax provision that provides for an excise tax equal to 2.3 percent of the sales price for medical devices sold beginning January 1, 2013. Manufacturers, producers, and importers are responsible for collecting the medical device excise tax and must file a Form 720, Quarterly Federal Excise Tax Return. The Joint Committee on Taxation estimated revenues from the medical device excise tax of $20 billion for Fiscal Years 2013 through 2019. ...

Our review found that both the number of Forms 720 filed reporting the medical device excise tax and the amount of the associated revenue reported are lower than estimated. The IRS is attempting to develop a compliance strategy to ensure that businesses are compliant with medical device excise tax filing and payment requirements and has taken several measures to advise medical device manufacturers of the new excise tax. However, the IRS cannot identify the population of medical device manufacturers registered with the Food and Drug Administration that are required to file a Form 720 and pay the excise tax.

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August 19, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 467

IRS Logo 2Forbes:  Are 'Expendables 3' & IRS Equally Expendable?, by Robert W. Wood:

The Expendables 3 is a little like the IRS. Did we need this third installment of the action movie franchise? It had a lackluster opening weekend and tepid reviews, so perhaps with ‘Expendables 3′ the Third Time’s Not a Charm. But it may have a hidden message.

An expendable movie about a cadre of aging action stars is a little like the sagging IRS. The IRS may never have been a star, but its star has fallen in recent years. For over a year now, it has been plagued by scandal and what sometimes seems like downright arrogance at the top. Even in the face of these sad developments, some claim there is not a ‘Smidgen Of Corruption’ at the IRS.

Like an aging action star demanding too much money and being frozen out, such behavior doesn’t bode well for the IRS. ... Expendables—the IRS—features an agency that collects billions and is charged with administering the nation’s tax laws. Make no mistake, that’s no easy job. Yet on the whole, I still think the IRS does a generally good job (no hate mail please). That is why it’s so terribly important that we restore some trust and accountability. ...

Does our our country have more important problems? Sure we do. But it’s still wrong that we cannot seem to get straight answers. The latest order from Judge Emmet G. Sullivan in the litigation filed by Judicial Watch asks for answers about the recently ‘lost’ emails of Lois Lerner and other IRS officials. See Judicial Watch v. IRS (No. 1:13-cv-1559).

The fact that a federal judge has had to launch this inquiry into the issue of the missing emails is a sad day for the IRS, regardless of whether the IRS realizes it. The IRS filings were at least lackluster and seemed not to take seriously the judge’s request for sworn declarations about the IRS email issue. The judge really means it.

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August 19, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, August 18, 2014

The IRS Scandal, Day 466

IRS Logo 2New York Observer: Deadline: Judge Emmet Sullivan Lays Down the Law:

On behalf of the country, Judge Emmet Sullivan is pounding the IRS and appears as unsatisfied as most of America with the agency’s stalling, side-stepping, neglect, arrogance, and cavalier attitude toward its legally required record-retention responsibilities. Late yesterday afternoon, Judge Sullivan entered an order that demands answers to a lot more questions.

The IRS’s filing in Judge Sullivan’s court Monday evidenced no interest in finding the emails all of us know are out there somewhere. The fact that the IRS took thirty days to file its meager declarations, which actually said less than it had disclosed to Congress, is truly insulting. The agency better take Judge Sullivan seriously—and fast—or he’s the one who will be furious. Have IRS officials Kane and Koskinen still not reviewed what this fearless enforcer of the law did to the last Department of Justice prosecutors who played games with the truth in his courtroom? ...

The IRS is represented by Department of Justice attorneys. Do they not read the news, the latest books, or the law? This column has tried to warn them repeatedly that, like Toto, they’re not in Kansas any more. They are in the federal courtroom of a real Article III judge who has powers they should bloody well know not to ignore—the same kind wielded by Judge John Sirica, whose integrity and persistence in dealing with the Watergate case led to the resignation of Richard M. Nixon.

This is the same Emmet Sullivan who appointed a special prosecutor and initiated criminal contempt proceedings and a full investigation of the Department of Justice attorneys who played unethical and dishonest games in the prosecution of United States Senator Ted Stevens.

Someone in DOJ or the IRS better find those emails, fast, or this Judge will do it for them and they’ll just think they were caught up in a Category V tornado—or wish they had been and carried off to Oz instead. Judge Sullivan will keep on until he finds the man behind the curtain.

One of the things I can’t help but continue to wonder is, if the emails and all the information truly were not recoverable from the Lerner hard drive, why did the hard drive have to be “degaussed” and destroyed to “protect taxpayer privacy”? And why did someone testify to Congress that an IRS IT expert said it should be given to an outside vendor to retrieve the messages—and instead, the hard drive was degaussed and shredded?

With each turn, the IRS has raised more questions than it has answered. But this time it’s not the media and the citizens doing the asking. They’ve now got a week to answer to a judge.

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August 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, August 17, 2014

The IRS Scandal, Day 465

IRS Logo 2Bloomberg: Federal Judge Wants Answers From the IRS on Missing E-mails:

A federal judge signaled that he doesn’t believe the Internal Revenue Service did all it could to unearth the missing e-mails at the heart of a Congressional investigation into the agency’s treatment of Tea Party organizations.

U.S. District Judge Emmet Sullivan late yesterday asked the IRS for a list of steps it took to retrieve e-mails of Lois Lerner, who was the official in charge of determining whether the antitax Tea Party groups could qualify for nonprofit status. The IRS has said a crash of her hard drive wiped out e-mails from 2009 to 2011.

Sullivan, appointed to the court by former President Bill Clinton in 1994, gave the IRS until next week to answer several questions about how it decided the e-mails were beyond recovery. Among them, he asked the agency whether it sought e-mails from alternate sources, such as a BlackBerry, iPhone, or iPad; to explain how it tracks computer parts when they’re serviced or taken out of use; and to provide a statement from an outside vendor “who can verify the IRS’ destruction policies concerning hard drives.”

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August 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Saturday, August 16, 2014

The IRS Scandal, Day 464

IRS Logo 2Legal Insurrection:  Judge Launches Special Inquiry Into Missing IRS Emails and Lerner Hard Drive, by William Jacobson (Cornell):

Judicial Watch has sued over missing IRS emails in the federal district court in D.C., pursuant to its FOIA request for such documents.

The IRS was ordered to provide explanations as to missing emails, particularly Lois Lerner.

The IRS provided explanations, but those were not good enough for the Judge, who launched his own inquiry into the matter, as Judicial Watch explained in a statement posted on its website.

Here is the Judge’s Order (emphasis added, hard paragraph breaks inserted for ease of reading):

MINUTE ORDER. In light of [26] the Declarations filed by the IRS, the IRS is hereby ORDERED to file a sworn Declaration, by an official with the authority to speak under oath for the Agency, by no later than August 22, 2014.
In this Declaration, the IRS must:
(1) provide information about its efforts, if any, to recover missing Lois Lerner emails from alternate sources (i.e., Blackberry, iPhone, iPad);
(2) provide additional information explaining the IRS’s policy of tracking inventory through use of bar code property tags, including whether component parts, such as hard drives, receive a bar code tag when serviced. If individual components do not receive a bar code tag, provide information on how the IRS tracks component parts, such as hard drives, when being serviced;
(3) provide information about the IRS’s policy to degauss hard drives, including whether the IRS records whose hard drive is degaussed, either by tracking the employee’s name or the particular machine with which the hard drive was associated; and
(4) provide information about the outside vendor who can verify the IRS’s destruction policies concerning hard drives.
Signed by Judge Emmet G. Sullivan on August 14, 2014.

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August 16, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Friday, August 15, 2014

The IRS Scandal, Day 463

IRS Logo 2Bloomberg, Judge Prods IRS on Effort to Save Lois Lerner’s E-Mail:

A federal judge asked the U.S. Internal Revenue Service for more information on efforts it made to recover missing e-mail from the computer of an agency official at the heart of a quarrel between Congress and the Obama administration.

U.S. District Judge Emmet Sullivan’s order today giving the IRS until Aug. 22 to come up with further details on what it did to retrieve e-mail from the malfunctioning computer of Lois Lerner signals his dissatisfaction with the agency’s earlier explanation, contained in an Aug. 11 filing. 

The order comes in a Freedom of Information Act lawsuit filed by the activist group Judicial Watch. The complaint seeks Lerner’s e-mail and other communications concerning the processing of applications for tax-exempt status.

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August 15, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, August 14, 2014

TIGTA: IRS Puts Confidential Taxpayer Information at Risk By Giving It to Contractors Without Required Background Checks

TIGTA The Treasury Inspector General for Tax Administration today released Some Contractor Personnel Without Background Investigations Had Access to Taxpayer Data and Other Sensitive Information (2014-10-037):

IRS policy requires contractor personnel to have a background investigation if they will have or require access to Sensitive But Unclassified (SBU) information, including taxpayer information. Allowing contractor personnel access to taxpayer and other SBU information without the appropriate background investigation exposes taxpayers to increased risk of fraud and identity theft.

Taxpayer and other SBU information may be at risk due to a lack of background investigation requirements in five contracts for courier, printing, document recovery, and sign language interpreter services. For example, in one printing services contract, the IRS provided the contractor a compact disk containing 1.4 million taxpayer names, addresses, and Social Security Numbers; however, none of the contractor personnel who worked on this contract were subject to a background investigation. In addition, TIGTA found 12 contracts for which IRS program and procurement office staff correctly determined that contractor personnel required background investigations because they would have access to SBU information; however, some contractor personnel did not have interim access approval or final background investigations before they began working on the contracts. Further, TIGTA identified 20 contracts for which either some or all contractor personnel did not sign nondisclosure agreements. In June 2013, after the period covered by our audit, the IRS issued more explicit guidance requiring the execution of nondisclosure agreements.

August 14, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 462

IRS Logo 2New York Observer:  Time’s Up for Lois Lerner and the IRS, by Sidney Powell:

On July 10, D.C. federal judge Emmet Sullivan gave the IRS thirty days to provide him sworn declarations in the Freedom of Information Act suit filed by Judicial Watch, seeking much of the same information the IRS has effectively kept from Congress. After an “extraordinary” hearing, Judge Sullivan ordered the IRS to tell him under oath exactly what happened to Lois Lerner’s hard drive. He demanded sworn declarations specifying what the agency had done to recover the thousands of emails missing. Time’s up.

The IRS filed its “declarations” yesterday. As an attorney who has read the filings and who has written extensively about this dedicated judge in my book Licensed To Lie, I could not in good conscience sign those filings. It’s not that they are false. Oh no, . . .each is very carefully worded to be literally true (hence, not perjurious). But, each says little, answers less, and reveals nothing that would actually lead to recovery of the emails or to anyone’s accountability for their disappearance in any form. In fact, the few pages say less than has already been revealed elsewhere. ...

[S]omeone in the IRS recommended that Lerner’s hard drive be given to an outside technician to retrieve the emails, but instead, it was destroyed. Who made that recommendation? Who over-rode it? Who authorized the destruction of a hard drive containing evidence of correspondence with the White House? How would that excuse work for a taxpayer’s records? Oooops, sorry. That’s a felony. ... The only thing these miserly declarations prove is that IRS has abdicated all responsibility and has no interest in finding the emails. But Judge Emmet Sullivan does.

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August 14, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Wednesday, August 13, 2014

TIGTA: Tax Exempt Tax Deadbeats -- Nonprofit Groups Owe the IRS Nearly $1 Billion in Payroll Taxes

TIGTA The Treasury Inspector General for Tax Administration today released Some Tax-Exempt Organizations Have Substantial Delinquent Payroll Taxes (2014-10-012):

IRS records indicate that the majority of tax-exempt organizations pay their Federal taxes. However, a small percentage are not paying their taxes. More than 64,200 (3.8%) tax‑exempt organizations had nearly $875 million of Federal tax debt as of June 16, 2012. While some organizations owed minor amounts, approximately 1,200 tax‑exempt organizations owed more than $100,000 each. Unpaid taxes were often associated with multiple tax periods. For example, nine organizations each had Federal tax debt spanning 10 or more years that collectively totaled more than $5.5 million.

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August 13, 2014 in Gov't Reports, IRS News, Tax | Permalink | Comments (1)

The IRS Scandal, Day 461

Tuesday, August 12, 2014

The IRS Scandal, Day 460

IRS Logo 2Biz Pac Review:  Sharyll Attkisson’s Impressive Account of How Watergate Would Play Out in Obama Era:

Sharyl Attkisson, the former CBS News reporter who left the network complaining because of liberal bias, offered a sobering account of Sunday how she thinks Watergate would play out today in the Age of Obama.

And it sounds awfully familiar.

Appearing on ABC’s “This Week,” Attkisson described what has basically been the pattern for every scandal of the Obama years – dubbed “phony scandals” by all the president’s men.

“I think that we’ve gone backwards since that time when we really felt empowered as journalists,” Attkisson said. “And all I can think is: What would happen today during a Nixon-type scandal?”

“Nixon would basically refuse to turn over tapes to Congress,” she said, in an apparent allusion to the IRS simply “losing” emails key to investigations of its targeting conservative groups.

“His aides would refuse to testify to Congress, or would take the Fifth, or would like to Congress with a fair amount of immunity,” Attkisson continued, describing the refusal of former IRS official Lois Lerner to testify before Congress and the stonewalling other administration officials have engaged in.

The Hill op-ed:  More Lost Emails — When Will Democrats Have Enough?, by Rick Manning (Citizens for Limited Government):

Twenty different Obama administration officials have lost or destroyed a portion of their email traffic. Email traffic that was, in some cases, under subpoena or in others requested as part of a larger inquiry into the conduct of the executive branch. ...

The brazenly contemptuous stonewall-and-erase-evidence approach to congressional inquiries preferred by the Obama administration is perhaps this president's greatest affront to our constitutional system of government.

When you have records going missing across an administration, it is impossible to conclude anything other than it is a coordinated and condoned cover-up, and not just a series of incompetent, coincidental keystrokes wiping out information.

The conclusions get even uglier when you realize that the IRS dismissed the government contractor responsible for maintaining back-up files of their emails concurrent with Lois Lerner and her band mysteriously having their computers flatline.

The question is, where are the Democrats in the face of this obvious malfeasance?

During the Watergate scandal that brought down the presidency of Richard Nixon, a few Republicans came forward and urged the president to come clean. Yet, the silence is deafening from Democrats in both the House and Senate in the wake of this obvious obstruction of the congressional oversight function.

Where are the patriots on the Democratic side, who are willing to stand up to an executive branch that has declared them inconsequential?

National Review op-ed:  Stonewaller-in-Chief: We’re Transparent, but Don’t Ask For Any Documents, Says the Obama White House, by John Fund:

The most valuable lesson I’ve learned in reporting about Washington is a simple one: watch what politicians do, not what they say. There can be no better illustration of this than Obama’s summit meeting with African leaders last week. He used the meeting as an opportunity to tout the positive role inspectors general can play in fighting corruption in government agencies; at the same time that he was speechifying about this, some two-thirds of President Obama’s own inspectors general wrote a scathing letter to Congress complaining that his administration was placing “serious limitations” on their ability to do their jobs.

Wall Street Journal editorial:  Justice's IRS Connection: The Lawyer Who Had Tax-exempt Cases Coming and Going:

It was fishy enough when Democratic donor Barbara Bosserman was appointed to lead the Justice Department investigation of IRS targeting of conservative groups. Now there are new questions about Justice's staffing choice on one of the private lawsuits brought against the IRS.

We've been telling you about the pro-Israel group Z Street, which sued the IRS in 2010 on grounds that the agency engaged in viewpoint discrimination when it singled out 501(c) groups with Israel-related missions for additional scrutiny. The case has been handled by Justice Department trial attorney Andrew Strelka, who previously worked in the IRS office run by Lois Lerner that handled tax-exempt applications. ...

[R]ecently Mr. Strelka was withdrawn as the Justice Department's counsel of record on the Z Street case. A review of court dockets showed that he has also withdrawn from two other cases involving tax-exempt groups, including Judicial Watch's suit against the IRS. ...

If Mr. Strelka had personal knowledge of the processing of tax-exempt applications for groups like Z Street while he was assigned to the IRS, he should have recused himself from handling the case at Justice.

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August 12, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, August 11, 2014

The IRS Scandal, Day 459

Sunday, August 10, 2014

The IRS Scandal, Day 458

Saturday, August 9, 2014

The IRS Scandal, Day 457

IRS Logo 2George Will, The Reason for Watergate:

June 17, 1971, was four days after The New York Times began publishing the leaked "Pentagon Papers," the classified Defense Department history of U.S. involvement in Vietnam. Nixon worried that further leaks would reveal his role in sabotaging negotiations that might have shortened the war. This fear caused Nixon to create the "the plumbers" and to direct an aide to devise other proposals such as the one concerning Brookings. This aide suggested using the IRS against political adversaries, but added:"The truth is we don't have any reliable political friends at IRS. ... We won't be ... in a position of effective leverage until such time as we have complete and total control of the top three slots at IRS." Forty years later, the IRS has punished conservative groups, and evidence that might prove its criminality has been destroyed. Happy anniversary.

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August 9, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, August 8, 2014

The IRS Scandal, Day 456

Thursday, August 7, 2014

Nebraska 'Sovereign Citizen' Convicted of Filing False Liens Against Federal Officials and Federal Tax Crimes

U.S. Department of Justice press release, Nebraska “Sovereign Citizen” Convicted of Filing False Liens Against Federal Officials and Federal Tax Crimes:

DOJ Logo (2013)A federal jury in Omaha, Nebraska, found Donna Marie Kozak guilty on Friday of conspiracy to file and filing false liens against two U.S. District Court judges, the U.S. Attorney for the District of Nebraska, two Assistant U.S. Attorneys and an Internal Revenue Service (IRS) special agent, the Justice Department announced.

The federal jury also convicted Kozak of filing a false claim against the United States for $660,000 and for corruptly endeavoring to obstruct the due administration of the internal revenue laws.  Kozak was remanded into custody pending sentencing.  The maximum prison term for each false lien charge is 10 years,  five years for the false claim charge and three years for the obstructing the IRS charge.  Many of the offenses have an additional 10 years of potential imprisonment because they were committed while Kozak was on pretrial release.

Based on the evidence introduced at trial and court filings, Kozak, a former member of the so-called sovereign citizen group “Republic for the united States of America,” engaged in a conspiracy to retaliate against federal officials involved in the criminal investigation and prosecution of David and Bernita Kleensang, associates of Kozak who were convicted of federal tax crimes in 2012.  Kozak initially retaliated against the federal judge who presided over the Kleensang trial by filing a false lien against her for $19 million with the Boyd County, Nebraska, clerk’s office.  After a federal grand jury indicted Kozak for filing the false lien and for federal tax crimes, she filed five $18 million false liens against federal officials at the Washington County, Nebraska, register of deeds office while on pretrial release.

The evidence introduced at trial and court filings also showed that since the late 1990s, Kozak has engaged in a long series of fraudulent schemes to obstruct the internal revenue laws.  These included placing her property in sham trusts, establishing a sham charitable foundation, sending harassing correspondence to IRS employees and filing bogus tax returns, trust returns, private-foundation returns and other false documents with the IRS.  In 2008, she filed a tax return based on fictitious income and tax withholdings on Form 1099-OID statements that claimed a refund of $660,000.

Above the Law, Tax Fraud, Tax Protestors, and the Most Awesome Willfulness Doctrine in Federal Criminal Law Today

August 7, 2014 in IRS News, Tax | Permalink | Comments (0)

Death of Cynthia Beerbower

Dayton Daily News Obituary:

Cynthia Gibson Beerbower passed away on July 26, 2014, in her South Kensington home in London. She was 65. ...

Cynthia received her BA, magna cum laude, from Mount Holyoke College in 1971, her JD from Boston University Law School in 1974 and her LLB from the University of Cambridge in 1976. At Cambridge, she was a member of Newnham College. She married John E. Beerbower in 1971. John, a 1966 graduate of Oakwood High School and also a panelist of the Dayton Daily News Youth Forum the year ahead of Cynthia, became a partner at the law firm of Cravath, Swaine & Moore in New York City in 1980.

After admission to the New York Bar, Cynthia was an associate at the New York City law firm of Simpson, Thacher & Bartlett, where she was elected a partner in 1981. She specialized in tax. At the time, she was one of only a handful of women partners at Wall Street law firms. In 1993, she joined the first Clinton administration, serving first as International Tax Counsel under Secretary Lloyd Benson and then as Deputy Assistant Secretary for Tax Policy under Secretary Robert Rubin. She left government service in late 1996.

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August 7, 2014 in IRS News, Obituaries, Tax | Permalink | Comments (0)

The IRS Scandal, Day 455

IRS Logo 2National Review:  No, the IRS Did Not Target Progressives Like It Targeted Conservatives:

NPR’s politics blog has published a chart — compiled from a House Ways and Means staff analysis — of the different levels of IRS targeting between conservative and progressive groups. Bottom line? Far more conservative groups faced IRS scrutiny, they faced more questions, and were approved at a much lower rate than progressives. The chart is based on the IRS’s now-discredited “BOLO” (be on the lookout) lists.

Chart 1

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August 7, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, August 6, 2014

The IRS Scandal, Day 454

IRS Logo 2National Review:  The IRS's God Complex:

Is the Internal Revenue Service a threat to religious liberty?

As the IRS continues to come under well-aimed fire for harassing conservative groups, on Friday it secured a final court order formalizing what amounts to a secret agreement to monitor the pulpits of ill-favored churches. The serious danger, as former Justice Department attorney J. Christian Adams told Fox News, is that the IRS will start treating “theology as politics,” and regulate it accordingly.

Lovers of liberty should be very concerned.

According to a June 27 IRS letter to the Justice Department, 99 churches merit “high priority examination” for allegedly illegal electioneering activities. The letter was sent in reference to a now-dismissed lawsuit filed by the atheist group known as the Freedom from Religion Foundation (FFRF). The suit originally was a rather broad one, demanding not only that the IRS enforce prohibitions against churches’ endorsing candidates specifically, but also that churches should be “required to file” what it described as “detailed annual information” that would force them (if they are like other nonprofits) to “expend substantial time and resources.”

With the end of the suit, those filings presumably will not be required (though a second suit, on just that subject, remains open). But IRS’s monitoring of alleged electioneering activities could still be quite onerous.

Traditionally, churches have been free to do just about anything short of outright candidate endorsements. Conservatives have suggested that not even that prohibition is enforced against traditionally liberal churches in black communities and that FFRF isn’t much concerned with such groups. But at least for conservative-leaning churches, FFRF has a much more restrictive agenda in mind. ...

FFRF has been crowing loudly about its “victory.” It asked for its suit to be dismissed “without prejudice” because the IRS was able to assure FFRF, in private discussions, that the agency would indeed take an active role in monitoring churches. That’s what the IRS’s June 27 letter to the DOJ, which specified that 99 churches warrant “high priority examination,” explained.

In fact, the IRS on July 22 filed a motion with the court specifically to deny the request of another church, which had become a party to the suit, for documents pertaining to the “agreement” between IRS and FFRF. In other words, shockingly, the IRS was now taking the side of the atheist group that had nominally sued it. One week later, FFRF filed a motion making clear, as its co-president Annie Laurie Gaylor put it, that the dismissal of its suit applies only if “our agreement has teeth.”

So even though the IRS will now put “teeth” into its monitoring of churches, the general public will not be allowed to find out exactly what those teeth can bite into (according to the IRS’s July 22 motion against release of documents, which the judge granted August 1).

Considering the IRS’s well-publicized penchant for burying or erasing evidence (even from Congress) of its bias against conservative political groups, this secrecy about enforcement teeth in the church-electioneering case should raise concerns from every traditionalist church and faith group.

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August 6, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, August 5, 2014

Reynolds: Public Servants Acting as Public Masters

USA Today op-ed:  Public Servants Acting as Public Masters, by Glenn Reynolds (Tennessee):

"Nothing could be further from the truth. I mean, we wouldn't do that." That was CIA Director John Brennan's answer in March when Sen. Dianne Feinstein, D-Calif., charged the CIA with breaking into computers used by Senate investigators looking into CIA misconduct.

It turns out that the CIA would do that — and, in fact, had done so. Brennan's reassurances were false, and CIA spooks had been hacking into the committee investigators' computers looking for documents they thought the investigators shouldn't have, violating a promise not to. So, first Brennan broke a promise. Then, he either lied, or showed that he doesn't control his own agency, which in many ways would be worse.

Brennan has apologized, but his apology won't be the end of things. We're already seeing bipartisan calls for his removal, from Sens. Mark Udall, D-Colo., Martin Heinrich, D-N.M., and Sen. Rand Paul, R-Ky. The White House is hanging tough so far, but we're now hearing comparisons made to the speed with which Brennan's predecessor, Gen. David Petraeus, was cut loose over an extramarital affair. Does this mean that the White House views spying on, and lying to, members of Congress as less serious than an affair?

The answer to that, alas, is probably "yes." Contempt for Congress, and for separation of powers and historical understandings about the roles of the executive and legislative branches, has been a hallmark of the Obama administration. It's not surprising that in such an atmosphere, CIA operatives would feel comfortable snooping on the Senate, and that a CIA director would feel confident issuing blanket denials when questioned. ...

Alas, as with the IRS' stonewalling of investigations into its targeting of Obama's political opponents, consequences for offenders seem hard to come by in the face of an administration that has no shame. Probably the best that Congress can do is to punish the entire CIA by using its budgetary power to make employees' lives worse: Cutting back on bonuses, raises, conferences, and other perks. Where the IRS is involved, there's some talk of abolishing most of it in favor of a national sales tax that would require much less bureaucracy and provide fewer opportunities for abuse, but that's unlikely to go anywhere anytime soon.

The sad truth is that when you elect irresponsible people into positions of power, you get irresponsible government. President Obama oozes contempt for Congress, and for longstanding unwritten political accommodations among the branches, at every opportunity. It's unsurprising that his underlings feel — and act — consistently with that view.

If the American electorate votes more responsibly next time, things will get better. Until then, alas, elections have consequences, and this is one of them.

August 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

The IRS Scandal, Day 453

IRS Logo 2Washington Post:  Lois Lerner’s Conservative Bashing: Smoking Gun or Just Cause for Investigation?:

The Federal Eye received lots of feedback in recent days about an article analyzing the e-mails in which former Internal Revenue Service official Lois Lerner described conservative talk-show hosts as “__holes.”

In that piece, we noted that career federal employees are allowed to have political views, as long as those views don’t influence their work or affect elections. We also noted that Lerner’s comments represent only circumstantial evidence rather than rock-solid proof that she used her authority to silence conservatives.

Some readers objected to our rationale. ...

To be clear, the point of last week’s article was not to suggest that authorities shouldn’t investigate Lerner for potential wrongdoing. It was to say that Republicans haven’t proven definitively whether the former IRS official used her position to slow down the proliferation of conservative advocacy groups. ...

Did Lerner’s unit use inappropriate techniques to scrutinize such groups? The answer is yes, according to the agency’s inspector general, who said in a report last year that the IRS selected groups for review based on their names and policy positions.

The next question, then, is whether those actions were part of an effort to target conservative groups while going easy on left-leaning organizations. In other words, did Lerner’s political views — such as those expressed in her e-mails — cause her to become less than impartial in her work? ...

[M]any of the facts in this case look bad for Lerner. Her IRS division used inappropriate screening techniques that largely affected conservatives. She was a registered Democrat who used offensive terms to describe firebrand right-wingers. She expressed a desire to work for an advocacy group founded by President Obama’s allies. And she invoked her Fifth Amendment rights instead of testifying before Congress about her involvement in the targeting behavior.

Regardless, that’s all circumstantial evidence. It makes Lerner a prime candidate for investigation, and it’s great campaign fodder for the midterm elections, but it does not prove that she violated the rules of professionalism by trying to hinder conservative groups. Republicans need direct evidence to confirm that theory, which is part of the reason they want an independent prosecutor to look into the case. It’s also why they are so frustrated with Lerner’s missing e-mails.

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August 5, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, August 4, 2014

The IRS Scandal, Day 452

Sunday, August 3, 2014

The IRS Scandal, Day 451

Saturday, August 2, 2014

The IRS Scandal, Day 450

IRS Logo 2Fox News:  Lois Lerner Ripping ‘Crazies’ on Right: Why Some Media Folks Don’t Care, by Howard Kurtz:

The new batch of Lois Lerner emails may or may not be a smoking gun. But they’re something of a Rorschach test for the media.

For the former IRS official to be branding conservative commentators as “crazies” and “a--holes” is a telling moment in this scandal—but some in the media could care less.

To be sure, this investigation has dragged on a long time without proving a link between the White House and the Cincinnati office’s targeting of advocacy groups, especially on the right, for special scrutiny of their tax-exempt status. Critics say that conservative outlets such as Fox have tried to keep the story alive.

But the administration has done a decent job of bringing the story back to the headlines. The IRS acknowledged that it could not find two years’ worth of lost emails written or received by Lerner, who pleaded the Fifth when summoned by Congress. And the commissioner, William Koskinen, sounded downright arrogant when he showed up on the Hill.

Now the Republicans have found three emails in which Lerner disparaged conservatives.

What did the New York Times give the story? One measly paragraph, written by the AP, in a roundup column.

How much airtime did the story get that night on ABC’s “World News”? None.

The messages don’t prove that Lerner deliberately targeted Tea Party groups for special scrutiny, or that higher-ups knew about it. But they reveal a whole heckuva lot about her state of mind.

To give it short shrift suggests a certain eye-rolling attitude toward the IRS story, or perhaps a tacit view that some conservatives are kinda nuts.

Imagine a swirling controversy about a Bush administration official who was alleged to be out to get liberal groups. Emails surface in which the person rips, say, pundits on MSNBC or other liberal activists. Wouldn’t the press go crazy that such a biased individual was in charge of investigations? Wouldn’t there be analyses and op-ed columns and followup stories?

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August 2, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Friday, August 1, 2014

The IRS Scandal, Day 449

IRS Logo 2New York Observer:  Did The White House Know About the IRS Emails? The IRS, the President, and his No. 1 Muse: Kathryn Ruemmler, by Sidney Powell:

The president’s longest serving White House counsel, Kathryn Ruemmler, was, until her sudden departure for Latham & Watkins, “a regular presence in the Situation Room and the Oval Office, making legal judgments and helping coach other senior officials on how to discuss them publicly,” according to the Washington Post. Our first article, “All The President’s Muses,” described Ms. Reummler’s outsized role in the aftermath of the Benghazi tragedy. It’s undisputed she starred in the president’s expansive use of executive powers, increased secrecy and recent Supreme Court reversals.

With the near daily revelations from the IRS, the question becomes, what exactly might Ms. Ruemmler know?

The Inspector General of the Treasury confirmed that the IRS targeted the president’s political opposition with audits, harassment and denials of tax-exempt status. Patrick Howley reported from congressional hearings that even more IRS computers surrounding Lois Lerner and the White House had crashed. Now the IRS is claiming that the number is greater than seven (the prior count) but fewer than 20. There may be emails on back-up devices, but the IRS still claims it isn’t sure.

The burning question is: have they looked in the White House? ...

Ms. Ruemmler’s recent midnight departure from the White House left her actions largely unscrutinized. Yet, she was squarely in the middle of the IRS controversy from the very beginning. As she told the Wall Street Journal, “The White House really sees everything, and you touch everything.” ...

As White House counsel, Ms. Ruemmler led the president in all federal appointments. Her fingerprints are all over the president’s attempt to appoint Mary Smith, a colleague from Ms. Ruemmler’s days in President Clinton’s Counsel’s office, to head the powerful Tax Division of the Department of Justice. Senator Grassley blocked that confirmation, leaving the White House “very upset.” In response, Lois Lerner suggested auditing Senator Grassley.

Not long ago, the president said he knew nothing about the IRS target-hunting. Roger Aronoff reported that both the White House Chief of Staff and White House Counsel Ms. Ruemmler knew about the targeting of conservative groups at least a month before (the now infamous) Ms. Lerner “planted a question” regarding the IRS’ abusive actions. “President Obama later claimed on national television that in terms of the IRS scandal, there wasn’t a ‘smidgeon of corruption’ in his administration, and blamed the whole episode on ‘bone-headed decisions’ of bureaucrats.”

Ms. Ruemmler claimed she did not tell the president—prompting even some Democrats, including Lanny Davis, a prominent Democratic crisis manager, to call for her resignation more than a year ago. Yet, she remained safely in place.

“Either Ruemmler was incredibly incompetent or the White House is lying about when Obama knew of the scandal,” writes Ed Morrissey at Hot Air. “We got a big hint . . . when Obama changed the context of a question about his awareness of the scandal to his awareness of the IG report, which is pointedly not the same thing.” ...

In an incredible stroke of luck, the emails on multiple computers that might reveal IRS agents’ communications with the White House were precisely the ones that mysteriously disappeared.

That lucky streak continued when by mere happenstance Ms. Ruemmler left the White House shortly before IRS Commissioner Koskinen was forced to admit that thousands of emails between Ms. Lerner, the White House and others were “missing.” ...

These IRS emails are today’s White House Watergate tapes. Who and how many people in the White House were recipients or senders? Surely, their computers haven’t crashed, too. How could 155 visits by a key IRS agent be missed by White House Counsel—the president’s fiercest protector?

So what did Ms. Ruemmler know and when did she know it?

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August 1, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, July 31, 2014

The IRS Scandal, Day 448

IRS Logo 2House Ways & Means Committee Press Release, Camp Sends More Evidence of Criminal Wrongdoing to DOJ (July 30, 2014):

Today, Ways and Means Committee Chairman Dave Camp (R-MI) sent additional evidence to the Department of Justice (DOJ) regarding the April 9, 2014 criminal referral letter which laid out evidence of possible criminal wrongdoing by former IRS employee Lois Lerner uncovered through the Committee’s investigation.

In releasing the letter, Camp stated, “Despite the serious investigation and evidence this Committee has undertaken into the IRS’s targeting of individuals for their beliefs, there is no indication that DOJ is taking this matter seriously.  In light of this new information, I hope DOJ will aggressively pursue this case and finally appoint a special counsel, so the full truth can be revealed and justice is served.”

In the letter to DOJ, Chairman Camp revealed:

Lerner had a bias against conservatives:

A newly discovered email exchange from Ms. Lerner’s official IRS email account, dated November 9, 2012, directly demonstrates Ms. Lerner’s deep animus towards conservatives, which she refers to as “---holes.”   Lerner further illustrates her disgust with conservatives, even suggesting they will ruin the country.  In her email, Lerner states: “So we don't need to worry about alien teRrorists. (sic) It's our own crazies that will take us down.”  This email shows that Ms. Lerner’s mistreatment of conservative groups was driven by her personal hostility toward conservatives.

Lerner used her personal email for official business, including taxpayer information:

The Committee also found that Lerner used her personal email for official business, including confidential return information.  The Committee believed that further investigation, using resources available to the Department of Justice, could reveal whether there was unauthorized disclosure of taxpayer information in violation of the law.  A newly discovered email from February 22, 2012 shows an exchange between Ms. Lerner and an IRS IT professional regarding a “Virus on Home PC.”  In the exchange, Ms. Lerner indicates that she kept work information on her home computer, some of which may have been lost.  She further states that her computer may have been “simply hacked because my password was too simple.”  This exchange further raises concerns that taxpayer information may have been leaked.  

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July 31, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, July 30, 2014

3' 10" Former IRS Agent Turned Clinical Sexologist for Little People of America

The Atlantic, The Challenges of Having Sex as a Little Person:

Dr. Marylou Naccarato was an agent for the Internal Revenue Service for decades before she became a clinical sexologist. “As a former IRS agent of 23 years,” she quips, “people ask, ‘How did you shift from working in the tax field to sexology?’ I always reply, ‘Well if you think about it, I haven’t really changed professions. It’s all about whether or not you’re gonna get screwed.’”

Standing at 3’10” with a rare type of dwarfism called Kniest, Naccarato has become something of a pioneer in the Little People of America community. She was a speaker at their conference earlier this month in San Diego where she broke through conservative boundaries to talk the ins and outs of sex, intimacy, and lovemaking with the various limitations that may come with life as a person of short stature.

Born and raised in Los Angeles to a Sicilian Catholic father and a Moroccan Jewish mother, Naccarato found herself in the sex counseling and education field by accident. Although she was working for the IRS, she had always wanted to be a social worker, until one night when she watched a program on sexual health on a cable network. “They were talking about the Kama Sutra," she recalls. "The narrator was explaining that in this particular male-female intercourse position, if the man was standing and the woman was on her back on the edge of the bed, it would be less pressure on his lower back." ...

She quit her job at the IRS and has since become something of a sex education mogul. She is a board certified clinical sexologist, has a doctorate from the Institute for Advanced Study of Human Sexuality, and certification as a sexuality educator from the American Association of Sexuality Educators, Counselors, & Therapists, where she was a speaker last month. She also serves on the board of the American College of Sexologists, was recently featured on Playboy Radio, and is a sex and disability blogger for sex-positive pioneer Betty Dodson’s website.

July 30, 2014 in IRS News | Permalink | Comments (0)

The IRS Scandal, Day 447

IRS Logo 2The House Oversight & Government Reform Committee holds a hearing today on IRS Abuses: Ensuring that Targeting Never Happens Again:

  • David Keating (Center for Competitive Politics)
  • Cleta Mitchell (Foley & Lardner)
  • James Sherk (Heritage Foundation)
  • Hans A. von Spakovsky (Heritage Foundation) 

Wall Street Journal:  GOP Report Floats IRS Changes on Tax-Exempt Group Oversight:

As the IRS probe grinds on, congressional Republicans are floating ideas to ensure IRS targeting of conservative groups doesn’t happen again. While they don’t call for ripping up the floorboards at the agency’s Washington headquarters, they come pretty close, according to a new report reviewed by the Wall Street Journal.

The House Oversight and Government Reform Committee report, prepared in advance of a hearing scheduled for Wednesday, recommends getting the IRS out of the business of regulating political activities by tax-exempt groups in order to ensure its continued objectivity.

“Congress must disentangle politics from the IRS,” the report said. “To regain the trust of American taxpayers, the IRS must return to its traditional role as a dispassionate administrator of the federal tax code.” ...

Perhaps the most eye-catching of the ideas in the report: eliminating the IRS commissioner job. Republicans say the commissioner structure has provided insufficient oversight of the agency at a time when its workload has been expanding rapidly.

Instead, lawmakers said, Congress should turn the IRS over to a bipartisan commission, like the ones that runs some regulatory agencies.

Wall Street Journal editorial:  The IRS's Foreign Policy:

The IRS has stuck by its story that tax-exempt applications by conservatives got slow-rolled because of bureaucratic bungling not because the groups opposed President Obama's policies. Now the slow drip of email evidence to congressional investigators is casting further doubt on that tale.

In 2009 the Pennsylvania group Z Street applied for tax-exempt status for its mission of educating people about Israel-related issues. In 2010 an IRS agent told Z Street that its application was delayed because the tax agency's Washington, D.C. office was giving special scrutiny to groups whose missions might conflict with Administration policies. The IRS's "Be On the Lookout" list that November also included red flags for groups referring to "disputed territories."

Z Street sued in August 2010 for viewpoint discrimination and its case is headed for discovery in federal court. Now emails uncovered by the House Ways and Means Committee show that the IRS and State Department were conferring in 2009 about pro-Israel groups like Z Street and considering arguments to deny their tax-exempt applications. ...

On Monday the IRS filed an appeal of the judge's decision denying its motion to dismiss Z Street's case. The government says the action stops all discovery while the appeal is pending, a process that could take months or even years. By filing the appeal on the last possible day, the Justice Department is running out the clock on discovery during the remainder of the Administration.

This is a whole lot of effort to prevent discovery in a case that is not even seeking damages. Ways and Means uncovered the email exchange between State and the IRS only after Treasury was forced to turn over documents it had previously withheld. What else did it lose in the ether?

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July 30, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Tuesday, July 29, 2014

Jost: IRS Releases Premium Tax Credit Rules and Draft Forms

Timothy Jost (Washington & Lee), Implementing Health Reform: IRS Releases Premium Tax Credit Rules and Draft Forms:

Although the focus of activity the week of July 21 was in the courts, the agencies were not totally silent. On July 24, 2014 the Internal Revenue Service released final and temporary  and proposed regulations addressing issues that are presented by the premium tax credit program. The IRS also released drafts of the forms that individuals, insurers, and employers will use for reporting information to the IRS necessary for reconciliation of premium tax credits and for the enforcement of the individual and employer mandate programs. Finally, the IRS set the maximum individual mandate penalty for individuals whose income is high enough that they pay the penalty as a percentage of income rather than a flat dollar amount. This amount is established by the statute as the average cost of a bronze level plan for the applicable family size for 2014 and was set by the IRS at $2,448 per individual annually, up to $12,240 for families of five or more.

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July 29, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 446

Monday, July 28, 2014

The IRS Scandal, Day 445

IRS Logo 2Wall Street Journal:  The ObamaCare-IRS Nexus, by Kimberley A. Strassel:

The IRS (famed for nitpicking and prosecuting the tax law), chose to authorize hundreds of billions of illegal subsidies without having performed a smidgen of legal due diligence, and did so at the direction of political taskmasters. The agency's actions provided aid and comfort to elected Democrats, even as it disenfranchised millions of Americans who voted in their states to reject state-run exchanges. And Treasury knows how ugly this looks, which is why it initially stonewalled Congress in its investigation—at first refusing to give documents to investigators, and redacting large portions of the information.

Administration officials will continue to use the IRS to try to improve its political fortunes. The subsidy shenanigans are merely one example. Add Democrats' hijacking of the agency to target and silence political opponents. What you begin to see are the makings of a Washington agency—a body with the power to harass, to collect, to fine, to imprison—working on behalf of one political party. Richard Nixon, eat your heart out.

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July 28, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Sunday, July 27, 2014

The IRS Scandal, Day 444

Saturday, July 26, 2014

The IRS Scandal, Day 443

Friday, July 25, 2014

The IRS Scandal, Day 442

Thursday, July 24, 2014

The IRS Scandal, Day 441

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July 24, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, July 23, 2014

The IRS Scandal, Day 440

IRS Logo 2House Ways & Means Committee Press Release, Lerner Hard Drive Was "Scratched"; IRS Ignored Advice to Use Outside Experts to Recover Data:

Despite early refusals to make available IT professionals who worked on Lois Lerner’s computer, Ways and Means Committee investigators have now learned from interviews that the hard drive of former IRS Exempt Organizations Director Lois Lerner was “scratched,” but data was recoverable.   In fact, in-house professionals at the IRS recommended the Agency seek outside assistance in recovering the data.  That information conflicts with a July 18, 2014 court filing by the Agency, which stated the data on the hard drive was unrecoverable – including multiple years’ worth of missing emails.

“It is unbelievable that we cannot get a simple, straight answer from the IRS about this hard drive,” said Ways and Means Committee Chairman Dave Camp (R-MI).  “The Committee was told no data was recoverable and the physical drive was recycled and potentially shredded.  To now learn that the hard drive was only scratched, yet the IRS refused to utilize outside experts to recover the data, raises more questions about potential criminal wrong doing at the IRS.”

It is also unknown whether the scratch was accidental or deliberate, but former federal law enforcement and Department of Defense forensic experts consulted by the Committee say that most of the data on a scratched drive, such as Lerner’s, should have been recoverable.  However, in a declaration filed last Friday by the IRS, the agency said it tried but failed to recover the data, but is not sure what happened to the hard drive afterwards other than saying they believe it was recycled, which, according to the court filing means “shredded.”

Further complicating the situation, the Committee’s investigation has revealed evidence that this declaration may not be accurate.  A review of internal IRS IT tracking system documents revealed that Lerner’s computer was actually once described as “recovered.”  In a transcribed interview on July 18, IRS IT employees were unable to confirm the accuracy of the documents or the meaning of the entry “recovered.”

“It is these constant delays and late revelations that have forced this investigation to go on so long,” Camp added.  “If the IRS would just come clean and tell Congress and the American people what really happened, we could put an end to this.  Our investigators will not stop until we find the full truth.”

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July 23, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, July 22, 2014

The IRS Scandal, Day 439

What Are The Chances? (An IRS Love Song):

(Hat Tip: Glenn Reynolds.)

Wall Street Journal, New Information Deepens the Mystery of the Missing IRS Emails:

The mystery of the missing IRS emails has deepened.

An IRS official told congressional investigators in an interview last week that — despite what agency leaders thought previously — some of the missing IRS emails might still exist on backup tapes.

Those tapes were thought to have been recycled several years ago, destroying the data.

Washington Post:  6 Questions About the IRS’s Missing Emails, From IT Experts:

Did the IRS intentionally lose e-mails to cover up potentially incriminating communications relating to the agency’s targeting controversy, or did the records go missing because of bad technology management?

As for the latter question, few organizations are in a better position to make an assessment of the situation than the International Association of Information Technology Asset Managers, which deals with these types of issues on a regular basis.

The group, which runs the only worldwide certification program for IT asset managers, released six questions on Monday that it thinks lawmakers and federal investigators should ask about the missing e-mails of former IRS official Lois Lerner, a central figure in the targeting affair.

  1. What happened to the IRS’s IT asset managers who appear to have disappeared at a key juncture?
  2. Where is the documentation to prove that the IRS wiped or destroyed Lois Lerner’s hard drive?
  3. Were the drives destroyed by an outside vendor or firm? If so, by who, and can they verify the destruction?
  4. What are the IRS’s specific policies and procedures on document retention when hard drives are damaged or destroyed?
  5. What is the IRS’s disaster-recovery policy?
  6. Where are Lois Lerner’s Blackberry e-mails?

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July 22, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, July 21, 2014

The IRS Scandal, Day 438

Sunday, July 20, 2014

The IRS Scandal, Day 437

Saturday, July 19, 2014

The IRS Scandal, Day 436

Friday, July 18, 2014

The IRS Scandal, Day 435

IRS Logo 2Forbes:  Despite Yearlong Investigation Of IRS, DOJ Just Learned Of Lost Emails From News Media, by Robert W. Wood:

For over a year now, the DOJ and FBI have been investigating the IRS targeting scandal. Yet a DOJ lawyer testified before a Congressional committee that even a year into its investigation, DOJ had no advance notice of the 2 years’ worth of emails the IRS says went missing years ago. ...

[T]his is astonishing. On June 13, 2014, the IRS admitted that it lost Lois Lerner’s emails from January 2009 through April 2011. DOJ says it learned of the missing emails after June 13, 2014 from the media! Oh, those two-years’ worth of emails to and from the key IRS figure who refused to testify to Congress about her job as a top IRS official? They covered the precise period of time when the alleged IRS targeting of Tea Party groups took place.

Republican Rep. Ron DeSantis asked Deputy Attorney General James Cole, “So you actually read about it in the press and nobody in the IRS ever went to the Justice Department to give you a heads-up, knowing you were conducting the investigation that some evidence may have been destroyed?”

“Not before the 13th of June,” Cole replied. “I think we learned about it after that, from press accounts,” Mr. Cole told House Oversight and Government Reform subcommittee chairman Rep. Jim Jordan. Rep. Jordan pressed Mr. Cole, “Is it a big deal to you Mr. Cole, a big deal to the Justice Department that the head of the Internal Revenue Service waited two months to tell the United States Congress, two months to tell the American people, and, most importantly, two months to tell the FBI and the Justice Department that they had lost Lois Lerner’s emails?”

Mr. Cole’s response seemed practically Presidential, “It depends on what the circumstances were behind,” Cole responded. The whole story may eventually come out, but the investigation has taken on a decidedly pale complection. Now there’s a new DOJ investigation underway into the IRS missing emails. One might wonder if it will ever turn up even a smidgen of corruption.

Meanwhile, a federal court may prove to be tougher. In a suit against the IRS brought by Judicial Watch, U.S. District Judge Emmet G. Sullivan ordered the IRS to explain what happened to Lois Lerner’s emails. The DOJ has done its best to avoid having to explain much of anything to anyone.

It is another seedy chapter that casts further doubt on the tax system. In 2013, the IRS targeting scandal was already brewing, and Ms. Lerner asked an IT specialist at the IRS if the IRS saved texts? They are not saved automatically, came the response, but since saving them was possible, be careful. “Perfect,” Ms. Lerner answered.

So the switch to texts was an even better way to adopt the IRS version of Moscow Rules. Even President Obama’s new IRS Commissioner Koskinen testified that he was completely unaware of the instant-messaging system. Still, he told a House committee he didn’t think Ms. Lerner’s response about the texts meant she was happy that IRS instant messages weren’t saved. ‘Perfect’ must mean different things to different people.

Forbes

Wall Street Journal:  Justice Department Learned of Lost IRS Emails From Press, Official Says:

Justice Department officials didn't learn until June that the Internal Revenue Service had lost two years' worth of emails that could shed light on the agency's treatment of conservative groups, a top Justice official said.

Deputy Attorney General James Cole told a congressional panel Thursday that the agency learned from press accounts in June that the IRS had lost the emails. The Justice Department announced more than a year earlier, in May 2013, that it was investigating the alleged IRS targeting of conservative groups, after an inspector general found tea-party groups faced unusual scrutiny and lengthy delays as they sought tax-exempt status.

Republicans said the disclosure supports their claim that the Justice Department hasn't been aggressive in pursuing its investigation of the matter.

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July 18, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, July 17, 2014

District Court Joins Loving, Holds IRS Lacks Statutory Authority to Regulate Tax Return Preparers

RTRPThe U.S. District Court for the District of Columbia yesterday followed Loving v IRS, 742 F.3d 1014 (D.C. Cir. 2014), and held that the IRS lacks statutory authority to regulate tax return perparers.  Ridgely v. Lew, 1:12-cv-00565 (D.D.C. July 16, 2014).

Prior TaxProf Blog coverage:

July 17, 2014 in IRS News, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 434

IRS Logo 2Wall Street Journal:  Justice Dept. to Investigate Lost IRS Emails:

The Justice Department is conducting a criminal investigation into the loss of Internal Revenue Service emails that could shed light on the agency's treatment of conservative groups.

As part of its criminal probe into the IRS's treatment of politically active conservative groups, the Justice Department is "investigating the circumstances of the lost emails from [former IRS official Lois Lerner's] computer," according to prepared testimony by James Cole, the deputy attorney general. Mr. Cole is set to appear at a hearing scheduled for Thursday before a panel of the House Oversight and Government Reform Committee. The Wall Street Journal reviewed his prepared testimony on Wednesday. ...

Mr. Cole's comments underscore the potential seriousness of the email loss, which has roiled congressional probes of the matter and angered some top GOP lawmakers. The IRS has blamed the loss on a crash of Ms. Lerner's hard drive—a common occurrence at the agency, officials say. They add a backup tape also was routinely recycled after six months.

Some Republicans regard the timing of the email loss in 2011 as suspicious, however, noting that it came just days after Republicans began questioning the agency's treatment of politically active conservative donors and groups.

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July 17, 2014 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)